So that you are fed up with renting. You want to own your house, but you will donrrrt you have a good deal of down payment. No doubt you’ve probably heard of “the perfect solution” – rent to own. But could it be really as perfect as everyone says – hardly. There are some secrets about rent to possess properties that you need to learn about. They’re most overlooked elements of a rent to own deal. So let us get the truth about lease to possess homes.
How Rent to have Works
Making this the way it operates. You rent a property with all the choice to buy. You will have lease that will typically last between Two or three years. The owner will also expect you to put some kind of upfront downpayment or option fee. It’s usually 1 to 7 % in the agreed upon purchase price. In addition to the rent, you will be paying what is known a Rent Premium or Rent Credit. This extra amounts put for the purchase price of the house.
Let’s wait and watch that the Salt Lake City, Utah rent to have would work out. By January, 2017 the median rent for a 3 bedroom, 2 bath house in Salt Lake City is $1,500. Currently the additional amount you will pay towards purchase is negotiable. Generally you are very likely to pay 20 to 50% across the market rent. For the sake of argument, let’s choose 25% which can be about average. So you’ll pay $1,500 a month in rent with an additional $375 for the purchase. In case your lease lasts Three years, you’d have a very rent credit in the volume of $13,500. Median home values in Salt Lake City are $280,000. In the event you paid a 3% option fee of $8,400 and combined by purchasing the rent credit, you’d end up with a advance payment of $21,900 or 7.8%. Pretty good.
The reality regarding homes for rent to own
Do you want to be aware of dirty little secret few buyers within your position realize? In the event you think that you are unable or unwilling to choose the house at the conclusion of the lease agreement, you forfeit Every one of the money that. That includes the Rent Premium and also the option fee. Gone. All of it. The seller keeps the cash and you also reach call a moving van and commence across.
You’d be surprised about how often times such things happen. The buyer might run into some difficulties with your home and so they want out. Money lost. The buyer might not be capable of qualify for a mortgage. Money lost. Or, imagine that the seller fails to give the mortgage along with the property gets foreclosed on. Yikes! Money lost.
So, before you race to snap up the closest rent to own or lease option property, ensure you do your homework and also have the house inspected. Begin working with a lender to be able to be eligible for a a home loan as well as goodness sake, be sure you really enjoy the house.
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